Department stores show biggest comp-store drop

New York — The same-store sales of most retailers hovered around single digits for June, both in gains and losses, as the impact of lower consumer confidence and a sagging economy continued to be felt.

Department stores were the hardest hit, as consumers fled to discounters and warehouse clubs to replenish everyday consumables, instead of purchasing apparel and luxury goods.

In fact, the three worst comp-store sales for June were reported by department stores: Marshall Field's, May Co. and Federated.

Target Corp.'s sales were slightly below plan for June, said chairman/ceo Bob Ulrich, because of below-plan performance at Marshall Field's and Mervyn's. The Target Stores division, however, was on plan.

May Co. noted that it moved a major sales promotion to the May reporting period this year resulting in a 3.6 percent sales decline.

Federated's 10.4 percent decrease in June sales from the prior year reflected the Fingerhut downsizing and the closing of the Stern's division, the company said.

The performance of the home category was a plus for some department stores. JCPenney listed home furnishings as one of the "best performing merchandise categories for the month."

And though Sears reported flat store revenues and negative comp-store sales for the month, areas of the company did shine, said Alan Lacy, chairman and ceo: "Our specialty store formats performed very well in the month of June with double-digit sales increases by Sears' Automotive Group, strong sales increases by The Great Indoors and solid hardware store increases."

Gottschalks cited lower sales in its home and children's divisions as the reason for its 1.4 percent decline in comp-store sales.

In line with its estimates, JCPenney also reported a big drop of 29.3 percent in catalog sales in June as compared to the previous year, citing the later distribution of the Fall/ Winter big book and overall weak consumer demand.

Jo-Ann Stores said its June sales benefited in part from the company's sku-reduction initiative, which it expects to have a positive effect on top-line sales performance while negatively impacting realized gross margin.

Edmond English, president and ceo, The TJX Cos., said, "We continued our focus on maintaining liquidity in our inventory position, which enables us to offer great values to our customers ... Additionally, we are encouraged by the good performance we saw in June in virtually all apparel categories, which bodes well as we move toward the Back-to-School season."

Kmart increased its June comp-store sales by 1.1 percent but showed a decline of 0.1 percent for last year. "We are pleased with our sales for the month of June, particularly in light of our ongoing transformation," said Chuck Conaway, chairman and ceo. "The extensive disruption in our stores continued during the month as we completed the conversion of our entire store base to the Fleming distribution system, reset another 726 stores and reduced our advertising by over 30 percent from last year." He added customer traffic has increased driven by the Bluelight Always program and improved execution.